Abu Dhabi National Oil Company confirmed trading of its Murban crude futures contract will begin on March 29 following the switch to forward pricing of its oil last year.
ICE Futures Abu Dhabi will start trading its flagship futures contract and a range of related cash derivatives against the widely-traded Brent and West Texas Intermediate contracts next month.
The ICE Murban Crude Oil Futures contract will be be based on a two-month delivery, with the first contract for June delivery expiring at the end of April.
“We continue to see very strong support from our customers, traders and other market participants for IFAD and the new ICE Murban Futures Contract," Khaled Salmeen, Adnoc's executive director of downstream industry, marketing and trading, said.
Murban is Abu Dhabi's flagship crude grade, which flows at approximately 1.7 million barrels per day. The company reversed its retroactive pricing mechanism for crude last year.
Adnoc's other crude grades, Upper Zakum, Das and Umm Lulu will be priced at a differential to Murban. While crude grades traded under Murban futures will be priced two months ahead, Adnoc will announce the prices for Upper Zakum, Das and Umm Lulu a month prior to loading.
Contracts traded at the Abu Dhabi exchange will be cleared at ICE Clear Europe alongside global benchmarks such as Brent, WTI, ICE Platts Dubai and ICE Low Sulphur Gasoil.
In 2019, Adnoc agreed a deal with oil majors including BP and Total, trading house Vitol and Asian energy companies to set up the international futures exchange for Murban.
Intercontinental Exchange Abu Dhabi is based at the Abu Dhabi Global Market, the capital’s international financial centre. Companies that signed the partnership include Thailand’s PTT, Japan’s JXTG and Inpex, BP, France’s Total, South Korea’s GS Caltex, PetroChina, Anglo-Dutch major Shell and Vitol.
Futures contracts allow traders to speculate on oil prices without taking physical delivery, so long as they sell contracts before expiry. Trading in oil derivatives is substantially larger than the physical market for oil, with about 2.5 billion barrels per day traded on exchanges, compared to about 100 million barrels used physically per day.
Adnoc recently set up its own trading unit at ADGM, which began trading crude oil in September last year and refined products in December.